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Stocks dive as Russia abandons U.S. dollar
Greetings,
Stocks dive as Russia abandons U.S. dollar
Moscow accelerates move in retaliation for Obama sanctions
The stock market dive Friday that brought the Dow Jones Industrial Average to near 16,000 and the Nasdaq to below 4,000 might reflect an accelerated move by Russia away from the petrodollar in retaliation for the Obama administration’s threatened economic sanctions over Russia’s takeover of Crimea.
Russia’s politically motivated attack on the petrodollar could trigger a major U.S. stock market collapse amid a global loss of confidence in the dollar caused by the Federal Reserve’s continuing policy of buying billions of dollars monthly in U.S. Treasury debt.
The Fed hopes to stimulate the economy by artificially keeping already depressed interest rates at zero.
With the Fed having limited options to address a panic caused by a bear market that could continue into next week, the risk of heavy selling of the U.S. dollar in international markets could raise prices in the increasingly import-dependent U.S. economy.
Hyperinflation could result, pushing the struggling economic recovery into a renewed economic recession.
On Friday, the third straight day of stock market losses, the Nasdaq plunged 54.37 points, or 1.3 percent, to 3,999.73. The Dow dropped 143.47 points, or 0.9 percent to 16,026.75, and the Standard & Poor’s 500 index fell 17.39 points, or 1 percent, to 1,815.69.
U.S.A. Today reported Friday that after the market selloff last week, investors remain jittery as the Nasdaq has dropped 3.1 percent, its worst plunge since November 2011, the S&P 500 has fallen 4 percent from its record high close of April 2 and is 1.8 percent lower for the year, while the Dow has retreated 3.3 percent from its Dec. 31 record close of 16,576.66.
Economist Peter Koenig, a former staff member of the World Bank, warned last week Russia is in the process of abandoning the “petro-dollar” as the trading unit for oil and gas transactions, with Russian hydrocarbon trade estimated at approximately a trillion dollars per year.
“The main supporters of this plan are Sergey Glaziev, the economic aide of the Russian president and Igor Sechin, the CEO of Rosneft, the biggest Russian oil company and a close ally of Vladimir Putin,” noted Voice of Russia radio April 4. “Both have been very vocal in their quest to replace the dollar with the Russian ruble. Now, several top Russian officials are pushing the plan forward.”
On March 21, Reuters reported Russia and China were close to finalizing a “Holy Grail” deal in which the Russian state-owned gas firm Gazprom would pump 38 billion cubic meters of natural gas per year to China starting in 2018. The gas would flow through the first pipeline between the world’s largest supplier of natural gas and the world’s largest user of natural gas, with the transactions to be valued in the Russian ruble, Chinese yuan or possibly in gold…..more here
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